Customer contract management is not a CRM task; it is a C-level responsibility, because the consequences of non-compliance in contracting are far-reaching and severe. Those supervising large capital contracts face personal risk, as well as risk to the organisation for death and personal injury, and poorly managing contracts directly affects the likelihood of litigation occurring and impacts on reduced revenues and profit margins.

Contract lifecycle management software on the sell side helps us get a better handle on what our organisation has committed to in customer agreements by providing visibility and access to agreements and pre-emptive alerts as trigger points approach. This mitigates our risk of non-compliance.

Quite probably you are not the person who negotiates and drafts the contracts in your organisation, but you manage customer accounts. If this is the case, then there may be important clauses in customer agreements that you need to know about, but don’t. One such clause is a possible right to raise the value of a contract by CPI every 12 months. There will be a limited opportunity before a contract rolls over into a new period where you are required to give notice that you are increasing the value of the contract, and if you miss the cut-off date, then you miss the revenue. There are many other possible reasons for cost increases that you may need to pass on, and these all have notification deadlines.

You must comply with your obligations to your customers. It is fundamental. You promise then you have to deliver (a contract is a promise). If you don’t have a system that monitors deliverables and milestones, then governing your commitments will prove troublesome and items will slip through the cracks. You won’t know that you are non-compliant until it is too late. And this non-delivery may mean annoying a customer or worse still, losing one.

Delays in some large contracts can make you liable to pay liquidated damages to your customer as a penalty for late delivery. Late or non-delivery can also lead to termination of an agreement, and possible litigation, costing your organisation millions in lost revenue and damages.

Contract lifecycle management can help you mitigate your risk of non-compliance to customer agreements by automating contract management processes using workflow and electronic approval routing. If you have contract management processes in place, or are developing them, Contract lifecycle management can make these processes available to your whole organisation as detailed process checklists that provide corporate consistency, accountability, and auditability.

The biggest risk is not knowing what your commitments are. How can you manage your risk if you do not even know what contracts you have? How long does it take you to locate a contract, its amendments, history, and associated correspondence and file notes? Sounds like it?s time to put in a system.

Tags: Business